Hello everyone!

Here is the scenario. I started a sole propiertoship and obtained a client through online networking. The job was pretty much data entry and he has goals in 2009 which include hiring up to five (5) virtual assistants on board.

We discussed project management which is something I was interested in and would definitely accept the opportunity if it presented itself. However, I told him that I didn't have too much experience in it "virtually" but more of it on-site. He said, "No problem. We can always learn."

Okay so the holidays are over and he sends me an email about hiring the first VA to come on board. He stated the maximum pay rate he would pay, the pay rate he would give me in managing the individual, and how many hours a week was needed.

The problem...as a sole propiertor, am I allowed to manage this individual? Wouldn't this be considered a multi-VA or sub-contract of some sort? Also, do I need to change from sole propiertor to another form of business?

He wasn't clear on whether he would pay the client directly or if he would make payment to me and then I would pay the client. I feel like I'm getting into something way too much and that I don't understand. Please help!!

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Aspiring VA - Jean
http://network.govirtualwithjean.com

Hi Jean, I'd first suggest clarifying with your client what HE has in mind - you may be worried about details that aren't going to fall on your shoulders after all.

As far as I know, your sub is still a business entity even if the money flows through you first - they'd rec'v a 1099 either way (assuming they make more than $600 in the year from the relationship) But I'd avoid that scenario simply for the headache of it all. If your client wants to hire multi VAs let him pay them each on his own. You don't want the risk of late payments, etc. to fall through to you if you're in the middle. Just my two cents, considering this sounds like a fairly new client. You can project manage without taking on the tax/invoicing issues of those you'll manage.

I'm curious about how this will pan out for you - please keep us posted!

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I agree with Tess. Unless he's going to pay you significantly more to do the invoicing and payments (plus pay you well in advance of needing to pay the subs), then he should handle it. It's probably best to call or email him and lay out the terms in advance to avoid any misunderstandings later.

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Kimberly
Facebook Marketing Magic!

Completely agree with what Tess said as well. I would get more info from him in greater detail as to what his expectations are.

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Dawn Riley
A Virtual Assistant in Paradise
Our business is about making yours better

Thanks for the suggestions ladies. Okay so we discussed a few hours ago about how he would like for it to work. He sends me the projects, I post on a project management software, I obtain invoices from sub-contractors, submit to client, and then he pays me, and then I pay sub-contractors.

He stated he didn't want to have to deal with invoicing from five different VAs and would rather get one bill from one VA. We agreed on late payment policy, which I don't think may be a problem since he makes payment the same day I send him my invoices.

So I guess the question is: do I change from sole proprietor to another form of business? Ask for W-9s in advance and do not deduct taxes from sub-contractors? I'm not sure how the taxes are on my end since I am doing the VA gig part-time at the moment. Maybe my accountant could help me with this? Not sure where to go from here...suggestions (once again pretty please)?

Originally Posted by Tess

Hi Jean, I'd first suggest clarifying with your client what HE has in mind - you may be worried about details that aren't going to fall on your shoulders after all. As far as I know, your sub is still a business entity even if the money flows through you first - they'd rec'v a 1099 either way (assuming they make more than $600 in the year from the relationship) But I'd avoid that scenario simply for the headache of it all. If your client wants to hire multi VAs let him pay them each on his own. You don't want the risk of late payments, etc. to fall through to you if you're in the middle. Just my two cents, considering this sounds like a fairly new client. You can project manage without taking on the tax/invoicing issues of those you'll manage. I'm curious about how this will pan out for you - please keep us posted!

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Aspiring VA - Jean
http://network.govirtualwithjean.com

As a sole proprietor you can still hire others as (sub)contractors and the only tax obligation you'll have, is to send them the 1099 at the end of the year (if, like Tess mentioned, they made more than $600). Since they're not your employees, but contractors, they are responsible for paying their own taxes.

Make sure you have agreements/contracts in place with your client and the sub-contractors too. That way everything will be spelled out and all parties will be protected.

And yes, your accountant probably has the best answers.

Good luck!

I agree with what Debbie said above...Be sure to get in touch with your accountant, but I do not believe there is any reason to change your sole proprietorship.

What you want to make sure of is to handle the agreement part of this before you start adding on VA's - be sure to find out how he needs/wants to be protected and how you can word it so you will be protected as well.

Enjoy- sounds fabulous!

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Crystal Curran of www.revaville.com

Hello everyone!

Thanks for all the advice. I will definitely ensure I have the sub-contractor agreements ready prior to starting the project as well as getting in touch with my accountant on 1099-MISC forms and such. You guys are great and I feel a bit better in making this transition! Have a terrific Thursday!!

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Aspiring VA - Jean
http://network.govirtualwithjean.com